E-commerce strategy could damage UK economy - report

A damning report published today slams parts of the government's e-commerce strategy as a "damaging and embarrassing failure" and claims the "blind alley" of key escrow is hobbling e-commerce in the UK

The House of Commons Trade and Industry Select Committee report, attacks the Department of Trade and Industry Bill on several fronts ranging from statutory licensing to key escrow and concludes that UK e-commerce has been "severely damaged" as a result of government delays.
The long awaited consultation paper -- first expected in December and finally delivered in March -- seemed to distance the government from key escrow and called on the industry to come up with alternatives. Results of the consultation are expected within a month. The select committee appears mystified by the government's attitude to key escrow. On page 90 the report states: "We can see no benefit arising from government promotion of key escrow or key recovery technology." The committee recommends key escrow should be dropped for good. "Powers for key escrow should not be taken in the forthcoming Bill to permit the introduction of key escrow or related requirements at a later date," it states.
The report reserves its most damning criticism for government proposals on statutory licensing which were intended to increase public confidence in e-commerce by forcing businesses to license themselves as trusted service providers. The report describes its policy as "not fit to be written into law" and attempts to do so would be a "damaging and embarrassing failure".
Research fellow from computer firm Bull Chris D-Arcy can see no point to the licensing scheme. "When you looked at what you had to do to get licensed it was a horrendous and required a military level of security. It was an incredibly onerous process and I was baffled by why anyone would want to go through the process," he says.
Industry reaction to the report was harsh. Caspar Bowden, director of the Foundation for Policy Research, describes the report as "a relentless castigation of squandered opportunities, loss of political control, and unaccountable policy failures in the face of unanimous public and industry opposition."
He recommends the government "extend the remit of the Cabinet Office E-Commerce Unit beyond July, and create a high-level technically trained staff to co-ordinate implementation of e-commerce policy across departments."
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